Genting Berhad’s flagship US resort, Resorts World Las Vegas, will continue to face some short-term headwinds by way of the threat of reputational risk from alleged regulatory violations and a delay in the property’s full ramp-up, according to ratings agency Fitch.
In a note, Fitch – which recently affirmed Genting’s “BBB” IDR Rating with a Stable Outlook – suggested that a revamp of RWLV’s compliance program would be the most likely outcome of the Nevada Gaming Control Board’s complaint but noted the potential impact on its bid for a full casino license in New York.
The complaint alleges RWLV and Genting failed to fulfill their responsibilities as a holder of a privileged Nevada gaming license by allowing individuals with suspected or proven ties to illegal activities to gamble on property. It also details how agents uncovered a lack of compliance within Resorts World Las Vegas (RWLV) which the NGCB claims allowed a culture that welcomed individuals with suspected or actual ties to illegal bookmaking, histories of federal felony convictions related to illegal gambling businesses, and ties to organized crime.
According to Fitch, “The Nevada Gaming Control Board’s complaint against RWLV over multiple regulatory violations is ongoing but appears to be asset-specific. “We expect RWLV to be subject to an external review and revamp of its compliance programs.
“Fitch believes Genting Group may face reputational risk in the short term until the complaint is resolved, with possible effects on Genting New York LLC’s bid to acquire a gaming licence in New York.”
Also of concern is RWLV’s overall performance, with EBITDA at the north Las Vegas Strip resort now forecast to reach US$350 million only by 2027.
“The integrated resort faces competition from other established resorts on the Las Vegas strip but its modern design as the first new property in the area in over a decade, diverse entertainment offerings and the global Genting brand helps it maintain a competitive edge,” the agency added.
Despite this, Fitch expects Genting Bhd’s leverage to gradually decrease from around 3.3x at end-2023 to around 3.0x by 2027, helped by steady EBITDA growth – mainly in relation to its integrated resort assets in Malaysia and Singapore.
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